Income Tax Department issues corrective measures for incorrect ITR filings or false deductions claims - Follow these steps to rectify mistakes
The Income Tax Department (ITD) of India has launched a nationwide crackdown on fraudulent Income Tax Return (ITR) refund claims, targeting individuals, intermediaries, and entities engaged in manipulating tax filings to illegally claim refunds. The enforcement action, which began on July 14, 2025, has seen operations in over 150 locations across multiple states.
Key aspects of this crackdown include the detection of widespread organized rackets run by unscrupulous ITR preparers and intermediaries, including certain chartered accountants (CAs), who have systematically filed returns on behalf of thousands of taxpayers, often claiming false deductions and exemptions without supporting documents. The ITD is using advanced data analytics, artificial intelligence tools, and third-party financial data to identify suspicious patterns and trace suspicious refund claims.
The campaign aims to promote voluntary compliance, as about 40,000 taxpayers have corrected their ITRs and withdrawn false claims amounting to ₹1,045 crore over the last few months. However, many taxpayers still appear non-compliant, potentially influenced by the masterminds behind these scams. Enforcement actions include detailed questioning, notices to taxpayers to rectify returns, penalties, prosecution, withholding of refunds, and even criminal investigations under relevant provisions of the Income-tax Act, 1961.
Investigations have revealed that certain CAs and tax intermediaries are central to running these fraudulent refund schemes, often acting as 'masterminds' who mislead taxpayers into inflating deductions and exemptions in exchange for commissions. These professionals reportedly assist by preparing and filing bulk bogus tax returns, sometimes using techniques like temporary email IDs to avoid detection, thus enabling large-scale systematic abuse of tax provisions.
The ITD has targeted premises linked to these CAs and intermediaries, collecting digital and documentary evidence to dismantle the rackets and ensure accountability. Refund cannot be taken from ITR-U. This is only an opportunity to correct your mistakes. Strict action will be taken against taxpayers who do not correct their mistakes.
The government encourages taxpayers to revise their returns and come clean through various outreach programs. The government has provided the facility of ITR-U for taxpayers to correct their wrong ITR for the last four years. Fake bills, fake donation receipts, incorrect TDS certificates, and even cloned PAN details were found during these raids. The government has been actively addressing the issue of fraudulent ITR refund claims to protect the integrity of the tax system and recover significant amounts of evaded taxes.
- In an effort to protect the integrity of the tax system and recover evaded taxes, the Income Tax Department (ITD) has been actively addressing the issue of fraudulent Income Tax Return (ITR) refund claims, which includes analyzing personal-finance data to identify suspicious patterns and trace claims.
- Some unscrupulous chartered accountants (CAs) and tax intermediaries, central to running these fraudulent refund schemes, manipulate personal-finance matters by preparing and filing bogus ITRs on behalf of taxpayers, often claiming false deductions and exemptions without supporting documents and using techniques like temporary email IDs to avoid detection.
